The Transition Kills More Portfolios Than the Trend

Most people don't lose their biggest money in a clear bear market or a clear bull market. They lose it during the transition between the two.

A bear market is actually simple: you manage your fear and slowly accumulate. A bull market is also simple: once the trend is established, you avoid jumping out too early and avoid reckless contract trading, and most people can make money.

The hard part is where we are now. One morning it feels like the bull is back. A few hours later it feels like the bear never left. You fear missing the rally, so you chase a bounce. Then the market reverses, and you realize the move wasn't that big, but your capital has become smaller.

I'm Cédric, also known as 老李, and this is my ninth year in crypto. This transition phase is where I've seen the most people hurt.

First, Accept That You Cannot Optimize Everything

Before you do anything with your money, accept one reality: no asset gives you high return, low risk, liquidity, and high capital efficiency all at the same time.

If you want high return, you have to accept larger drawdowns. If you want low risk, your return ceiling comes down. If you need cash available for emergencies, you give up the best locked returns. If you want maximum capital efficiency, your room for error gets very thin.

In a transition phase, the pain comes from holding two opposite fears at once. The chart is already moving up, but some analysts are still calling for new lows. You feel the urge to wait for a pullback, and at the same time the urge to jump in before you miss it. Both urges exist at the same time, and the result is emotional decisions rather than a plan.

Some people wait for a perfect signal, and by the time it arrives, the price has already run far. Others go all in and get caught by a deep pullback. I have paid this tuition myself in previous years.

So the first step is to decide which one or two of those four things you truly need, and accept the trade-offs for the other two. After that, you can build a plan.

Split Your Capital: Spot, Grid, Cash

These three parts have separate jobs. That way, one wrong directional call doesn't wipe out your entire portfolio. Splitting the portfolio this way is simply a more stable way to face an uncertain phase.

  • Spot: for trend. If you judge the medium-term direction correctly, use this part to hold through volatility and let time work. You don't need to catch every swing; you just need the direction.
  • Grid: for sideways chop. When direction is unclear and price keeps ranging, spot only goes up and down with the market. A grid is more comfortable: you buy on dips and sell on rallies, turning dead time into income.
  • Cash: for a buffer. This part looks useless, but it protects you from liquidation and emotional collapse during violent moves. A bull/bear transition is exactly when you need cash in reserve, not when you should be fully deployed.

Keep Leverage Out of Grid Trading

Contract grids, the leveraged kind, are very popular right now. Many people treat them as a quick money printer. To my subscribers, I always say the same thing: never touch leverage, never open contracts. I have repeated this in videos for years.

Grid logic itself is fine. But if you add leverage and derivatives, one wick can liquidate you before the grid has collected any real profit. The floating PnL on your screen can jump dozens of times a day, but that screen movement is not the same as grid earnings. Floating PnL misleads you into bad decisions.

Real grid profits come from the small, repeated buy and sell spreads when price oscillates in a range. Let your grid spacing be wider, and keep leverage at zero. A grid is a tool to harvest time, not to accelerate gambling. Confuse the two, and the next wick will teach you the hard way.

The Only Adjustment Signal: Valid Breakdown of Support

How do you know when to adjust this allocation? The standard is clear: whether key support has been validly broken.

A false breakdown is a wick below support that snaps back quickly. Volume is usually weak, and price recovers fast. If you panic and sell there, you hurt yourself.

A valid breakdown is different. Price closes below support, and the market structure really changes. At that point, the logic for holding your original spot and running your grid no longer holds. Continuing the old plan only drags you deeper.

When you see a valid breakdown, don't be emotional. Reassess the structure, reduce what needs to be reduced, and step back to observation if necessary. When market structure changes, your response has to change. It's hard, but it's the only way to lock in the gains you already have.

Risk-Adjusted Return, Not Maximum Return

The bull/bear transition is the most tempting and most testing period. Many people focus on how to earn the maximum. What I've learned over the years is that the best approach is the one where every unit of risk you take is actually rewarded.

In practice, that means three buckets: spot for trend, grid for sideways, cash for a buffer. It means never adding leverage to a grid. And it means adjusting only when support is validly broken, not on every false wick.

Once you internalize these rules, the transition stops being a trap. It becomes just another phase you can navigate without getting caught off guard.